Rocket Mortgage (RKT)

Rocket Mortgage is a top online mortgage lender based in the United States, headquartered in Detroit, Michigan. Often called Rocket Mortgages, the company is a subsidiary of Rocket Companies, Inc. (formerly known as Quicken Loans), which was the largest mortgage lender in the United States. They’re listed on the NY NASDAQ exchange as RKT.

The company is an innovator in the mortgage industry having introduced a fully digital mortgage application process, making it faster and more convenient for borrowers.

Its stock has risen a dramatic 40% this year despite a struggling housing market with a weak forecast. Today’s corporate announcement, discussed below gives it more clout in the mortgage sector, and perhaps might lead to lower mortgage borrowers across the US and Canada.

Rocket Mortgage specializes in providing home loans, including purchase loans, refinancing, and home equity loans. They offer a variety of mortgage products, such as fixed-rate mortgages, adjustable-rate mortgages (ARMs), FHA loans, VA loans, and jumbo loans. Their primary focus to integrate a fragmented mortgage lending marketplace by simplifying the mortgage process through technology, allowing customers to complete the entire process online or via their mobile app.

The company may be a viable option for you as a homebuyer or anyone trying to renegotiate their current mortgage.

Today, the company announced a major acquisition of the real estate firm, Redfin.

Rocket’s March 10^th press release:

Today, Rocket Mortgage announced the acquisition of the major real estate brokerage known as Redfin. The acquisition of a real estate company helps their brand reach millions of new, potential customers.

Redfin (RDFN, Financials) agreed to be acquired by Rocket Companies (RKT, Financials) in an all-stock deal valued at $1.75 billion, with Redfin shareholders getting 0.7926 common class shares for each Redfin share. It is scheduled to be fully complete by the second or third quarter of 2025, depending on shareholder and regulatory clearance. This acquisition gives Redfin’s shareholders a 63% premium over Redfin’s 30-day volume-weighted average price.

Benefits for Mortgagees

As a mortgage borrower, you have source options that include major banks, online lenders, and the secondary mortgage market through intermediaries. Rocket Mortgage is part of the primary mortgage market where they sell directly to consumers.

In fact, the ONE+ product offered by Rocket Mortgage allows qualified borrowers with a mortgage of up to $350,000 to put as little as 1% or as much as 3% down toward a home purchase. There are qualification requirements.

Rocket Mortgage offers:

Competitive Rates:

Rocket Mortgage offers competitive interest rates compared to industry standards. Their rates are influenced by market conditions, the borrower’s financial profile (credit score, income, debt-to-income ratio, etc.), and the type of loan.
They provide personalized rate quotes during the application process, which can help borrowers understand their options.

Rate Transparency:

Rocket Mortgage’s platform allows borrowers to see their potential rates and loan terms upfront, based on the information they provide. This transparency helps borrowers compare options and make informed decisions.
However, the rates shown are not guaranteed until the borrower locks in the rate, which typically happens later in the process.

Rate Shopping:

While Rocket Mortgage offers competitive rates, they do not necessarily guarantee the absolute lowest rates available in the market. Borrowers are encouraged to shop around and compare rates from multiple lenders (e.g., banks, credit unions, and other online lenders) to ensure they’re getting the best deal.
Rocket Mortgage’s value lies more in its convenience, speed, and customer experience than in consistently offering the lowest rates.

Factors Affecting Rates:

Rocket Mortgage’s rates depend on the borrower’s financial situation. For example, borrowers with excellent credit scores, stable income, and low debt-to-income ratios are more likely to qualify for the lowest rates.
They also offer tools to help borrowers improve their financial profile, such as tips on raising credit scores or reducing debt, which could lead to better rates.

Rate Lock Options:

Rocket Mortgage allows borrowers to lock in their interest rate for a specified period (e.g., 30, 45, or 60 days) to protect against rate fluctuations during the loan process. This can be beneficial if market rates are rising.

Refinancing Opportunities:

For existing homeowners, Rocket Mortgage offers mortgage refinancing options that can help borrowers secure lower rates if market conditions have improved or if their financial situation has changed (e.g., higher credit score or increased home equity).

How Rocket Mortgages Sell Mortgages

Rocket Mortgage operates entirely online, which sets it apart from traditional brick-and-mortar lenders. Here’s how their process works:

Digital Application: Customers can apply for a mortgage through Rocket Mortgage’s website or app. The platform uses a user-friendly interface to guide borrowers through the application process.
Document Upload: Borrowers can upload necessary financial documents (e.g., pay stubs, tax returns, bank statements) directly to the platform.
Instant Verification: Rocket Mortgage uses automated verification tools to quickly assess a borrower’s financial situation, including income, assets, and credit history.
Customized Loan Options: Based on the borrower’s financial profile, Rocket Mortgage provides personalized loan options with competitive rates and terms.
E-Sign and Closing: Once a loan is approved, borrowers can electronically sign documents, and the closing process is handled efficiently, often with the option for remote notarization.

Rocket Mortgage’s Value Proposition

Rocket Mortgage’s value proposition centers on speed, convenience, and transparency. Here are the key elements:

Fully Digital Experience: Rocket Mortgage eliminates the need for in-person meetings or paper-based processes, making it easier and faster for borrowers to secure a mortgage.
Transparency: The platform provides real-time updates on the status of the application, and borrowers can track their progress at every step.
Competitive Rates: Rocket Mortgage offers competitive interest rates and terms, appealing to a wide range of borrowers.
Customer Support: Despite being a digital-first company, Rocket Mortgage provides access to mortgage experts via phone, chat, or email for personalized assistance.
Innovation: As a pioneer in the digital mortgage space, Rocket Mortgage continuously invests in technology to improve the user experience and streamline the lending process.

This is major news for the real estate industry and will position Rocket Companies as a major competitor up against Zillow, NAR, Homes.com, and others with big upside to grow new business with Redfin customers and to leverage Redfin’s well-known presence.

Catch up on the latest mortgage rates and get acquainted with the housing market outlook for 2025 and the risk of a recession and a housing market correction before you buy a home.